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Deloitte CFO Signals™ Survey: Low sales and earnings expectations – Put hiring plans on hold for Canadian companies

Low figures also keeping capital spending growth expectations below those in the United States

Canadian CFO’s expectations for sales and earnings growth dip to lowest levels in past 10 quarters, according to Deloitte survey.

Toronto, January 8, 2014 ― Chief financial officers in Canada are not expecting any immediate gains in domestic hiring as their sales and earnings growth expectations have fallen to the lowest levels in the past 10 quarters, according to Deloitte’s Q4 CFO Signals™ survey. Similarly low sales growth expectations in the United States aren’t dampening hiring expectations there, however, as U.S. CFOs expect a 1.7 % rise in domestic hiring early in 2014. U.S. CFOs are also expecting a much higher boost in earnings than their Canadian counterparts and plan to raise their capital spending at more than three times the rate of Canadian companies.

The quarterly survey, which tracks the thinking and actions of CFOs representing North America’s largest companies averaging more than $5 billion in annual revenue, saw sales growth expectations among Canadian CFOs fall to 4.2%, while earnings growth expectations slipped to just 3.7%. As a result, net optimism (the difference between the percentage of CFOs expressing rising and falling optimism) among Canadian CFOs declined to +25 in the fourth quarter of 2013 from the high of +39 recorded in the second quarter of 2013 and +35 in the third quarter.

“Canadian CFOs are continuing to show relatively strong net optimism overall, but this has not translated into stronger positive expectations for their companies’ economic prospects in the shorter term,” said Bill Cunningham, leader of Deloitte’s CFO program in Canada. “Sales growth expectations among Canadian CFOs are now about a third lower than what they have been predicting over the past two years, while earnings growth is less than half the traditional figure and well below the North American average. That may help to explain why, for the first time since our survey began, Canadian CFOs are predicting no increase at all in domestic hiring.”

For U.S. CFOs, however, the Q4 survey showed net optimism up considerably, at +36 compared to +16 last quarter, but like their Canadian counterparts, U.S. CFOs are much less positive about their sales and earnings growth expectations than their net optimism might suggest. According to the Deloitte survey, CFOs in the United States expect sales growth of just 3.8% (a new survey low) and earnings growth of 9.5%, slightly below the historical average. Despite this, their domestic hiring growth expectations are the highest they have been in six quarters while their capital expenditure growth expectations are a relatively strong 6.7% compared to Canadian CFOs’ expectations of just 2.2%.

“The low expectations for capital expenditure growth among Canadian CFOs should be a concern for anyone who wants to see Canada’s productivity increase in order to strengthen the Canadian economy,” said Eddie Leschiutta, regional leader of Deloitte Canada’s CFO program. “Unfortunately, too many Canadian companies have been underinvesting in productivity-enhancing measures, and the latest CFO Survey suggests the problem is going to continue for the foreseeable future.”

CFOs have expressed rising confidence in the North American economy in recent quarters, but the trend has now reversed. This quarter, 26% classify the North American economy as good, a decrease from 38% in Q3. There are signs of rising optimism regarding Europe and China, however. The proportion of CFOs classifying the European economy as good is still below 5%, but the proportion viewing it as bad fell to 63% – an improvement from 80% in Q3 and 90% in Q2. Similarly, expectations for China rebounded this quarter, with 33% of CFOs saying the Chinese economy is good, up from 25% last quarter.

In addition to concerns about the North American economy, CFOs continue to express high levels of concern regarding government economic policy, regulation and the effects of the potential end of quantitative easing. Industry specific regulation was cited as a substantial impediment by 45% of CFOs overall, with the highest prevalence in the financial (54%), healthcare/pharma (67%) and services (63%) sectors. Government spending and budget policy was cited as a substantial impediment by 40%.  

The Deloitte CFO Signals™ survey also revealed the following results (estimates are adjusted averages to reduce the effect of outliers):

  • Signs of rising conservatism and defensiveness. Companies still indicate a bias toward “pursuing opportunity” over “limiting risk,” but the margin has declined notably while the proportion focused on “contracting/rationalizing” rose.
  • Limited pressure on cash levels: More than half of CFOs say they have added liquidity sources over the last few years, and equal proportions say their cash levels will be higher and lower in a year. 17% say they have received Board pressure to return cash, and the same proportion say their Boards are worried about activist investors. About one-third say they face conflicting pressures from long-and short-term investors.
  • Dividend growth expectations remain among their recent highs. After two years of lower growth expectations, dividends are expected to rise 4% overall, consistent with the long-term survey average. Canadian CFOs expect dividend rises of 3.4%, above their average expectation of 2.8% for 2013 as a whole but down from the 5.1% they expected in Q3.
  • Capital spending growth expectations still weak by historical standards. At 6.4%, capital investment growth expectations in Q4 2013 are below the long-term survey average of 8.5%, even after rebounding from a survey low of 4.2% in the same quarter last year. Canadian CFOs’ expectations of 2.2% in Q4 2013 were less than a third of those of U.S. CFOs (6.7%).
  • Finance organizations evaluated mostly on “business support”: CFOs say business support metrics are their most important finance measures, led by internal client satisfaction scores, achievement of plans and budgets and forecast accuracy. Also among the most-mentioned measures are quality of financial reporting and finance costs.  

Download a copy of the survey

*All numbers with an asterisk are averages that have been adjusted to eliminate the effects of stark outliers.

The Deloitte CFO Signals survey was conducted for the fourth quarter of 2013 between November 8, 2013 and November 22, 2013. Seventy-nine percent of the 96 CFO respondents were from organizations with more than $1 billion in annual revenues, and 68 percent were from publicly-traded organizations. There were 16 Canadian CFOs who took part, representing about 17% of the CFOs surveyed.

Each quarter, CFO Signals tracks the thinking and actions of CFOs representing many of North America’s largest and most influential organizations. This report summarizes CFOs’ opinions in four areas: business environment, company priorities and expectations, finance priorities and CFOs’ personal priorities.

For more information about Deloitte’s CFO Signals™, or to participate in the survey, please contact

About Deloitte’s CFO Program
Deloitte’s CFO Program harnesses the breadth of Deloitte’s capabilities to deliver forward-thinking perspectives and fresh insights to help CFOs manage the complexities of their role, drive more value in their organization, and adapt to the changing strategic shifts in the market. For more information about Deloitte’s CFO Program, please contact or visit  

About Deloitte
Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited. Deloitte operates in Quebec as Deloitte s.e.n.c.r.l., a Quebec limited liability partnership.

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